The Civil Engineering Contractor November 2018 | Page 41

BUSINESS INTEL
view is that there needs to be some
form of prediction factor of what might
happen in the future — although this is
purely hypothetical as no insurer looks
at predictive behaviour at present.
We’ve been in a soft market for a very
long time, but the events of the past
year have forced many underwriters
back to the book and there may have to
be a re-evaluation of premiums or new
set of risk mitigation requirements in
the coming year.
“What engineers can do to make
properties more weather-proof — if
they are not already doing so — is
to build flood drainage systems and
to construct on elevated structural
platforms for buildings in low-lying
areas. These would mitigate the risk of
flooding during storms, such as we saw
last year,” says Viterenwa.
Mofubetsoana suggests that another
underwriting requirement that might
soon be introduced would be to
increase the periodic inspection of
structures from three-yearly intervals
to yearly. Insurers could also become
more demanding as to geotechnical
investigations to ensure the topography
of the area is flood-proofed. Other
mitigating factors might be to look at
the quantum of the excess or sharing
the first loss between the developer or
property manager and the construction
or civils contractor.
Based on these trends, insurers
may in future be asking clients for
risk improvement actions such as
retrofitting buildings to withstand
more extreme storms. The solution
is to take a proactive approach to limit
the likelihood of catastrophic damage
by engaging with clients and making
sure that they are prepared for these
kinds of events.
Climate change experts
At a recent panel discussion on how
extreme weather is affecting insurers,
hosted by Norton Rose Fulbright in
Sandton, Professor Coleen Vogel of
the Global Change Institute at Wits
University presented evidence that
Africa is experiencing more extreme
weather changes than the rest of the
world: average temperatures on the
continent are rising 0.11°C each
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decade, double the rate of the rest of
the world.
Climate change experts argue
that engineers may have to look at
how they design roads and other
infrastructure in light of extreme
weather event statistics. Weather
damage need not be of catastrophic
proportions: one need only look at
the number of potholes pockmarking
roads after a severe thunderstorm.
Or roof damage. This is likely to
be the pattern going forward. Road
builders, engineers, and architects
are going to have to get involved if
the weather of recent years is any
prediction of what is to come.
Globally, insurers have established
a leadership group, ClimateWise,
which was founded in 2007 and is
part of the Cambridge Institute for
Sustainability Leadership. It has 29
leading global insurer representatives
and others from across the insurance
industry. ClimateWise focuses on
providing a framework for business
operations, including investment
strategies, customer engagement,
product development and also how
they inform public policy.
It collaborates with other industry
sectors, policymakers, and academics
to provide research and thought
leadership on topics such as clean
energy, city resilience, sustainable
responses to claims management,
low carbon investment, and rural
resilience. It has developed a guide
to help countries (particularly in
emerging economies) work on
infrastructure risk and resilience.
“We have nothing to lose by working
on the assumption that the increased
incidence of catastrophic natural
disasters is a consequence of climate
change, and we need to prepare
ourselves as though these claims
were due to permanent changes to
climate. The whole point of insurance
is the spreading of risk to make risks
affordable. The danger of not reacting
to climate change in time is that
premiums spiral out of control and
insurance cover for property becomes
no longer affordable — at which
point the very philosophy on which
insurance is predicated becomes lost,”
says Mofubetsoana. nn
CEC November 2018 | 39
CEC November 2018 | 39